Retail Industry Issues - Case Study Example

Select Harvest Industry Analysis Name: Course Professor’s name University name City, State Date of submission Retail Industry Outlook Within the food division the company boasts of being Australian Industry leaders that are producing popular products in the market such as Sunsol, Lucky, and Nu-vit[ODo13]. The Lucky brand has driven growth in the dried food and Nut category for longer than half a century. The Year 2013 saw the Lucky Brand continue to be Australian preferred consumer brand of cooking and baking nuts. As it being, the SHV Market leading brand its continued success for years was bolstered by advertising campaigns during the Christmas period. This advertisement tempted consumers with their suggestions of delicious range of Christmas recipes. For over 20 years the Sunsol brand has been popular in the muesli category in the retail market. It also specialized in the whole food products. Sunsol has a range of over 100 products including cereals, nuts, dried fruits, grains, seeds snacks and mixes. This brand is often sold in independent supermarkets[ODo13]. Soland specializes in quality whole food products and healthy natural foods. Within the year 2013, it continued its leadership in healthy food brand in food stores and pharmacies within Australia. In retail shops it offers a range of nutritious foods including nuts, legumes, pulses and dried fruits. Nu-Vit performance during the year 2013 also proved successful. Its performance in retail industry especially supermarkets through out Australia was impressive. Notably its performance in outside markets like Hong Kong and Singapore was enjoyed as consumers in these regions enjoyed healthier eating options. There has been a subsequent increase between the amounts of earnings from the retail business of the company. In the Financial Year 2014 the company boasted of an increase in the earning associated with foods retail sale of $5.644 Million up from the financial year 2013 that was $ 5.450[Cha141]. Porter’s 5 Force Analysis [Com13] The threat of new market entrants Barriers that exists in the set up of a retail shop in Australia is moderately high since the country is a first world country[Wij12].All the major industries in Australia in the Agricultural sector have reached 80:20 saturation. To simplify the information all agricultural branches have reached 80% of the level of product provided by the 20% of all producers. Thus creates a large retail industry[XNT11]. If warnings by the Australian Grocery and food council is received that Food manufacturers are taking into consideration moving operations off shores is realized producers will feel further constraints of the market locally. Many Places in Australia the value of conducting agriculture in land makes it difficult for them to engage in the market. Even if loan is secured still they are hit by stamp duty of 5%. The threat of substitute products There is presence of substitute products in retail shops in Australia. This is especially the case in the department stores that sell a wide range of goods. Substitution does exist in Select Harvest market and it will continue to exist. Price and preference however continue to be the determining factor in the retail market in Australia[Sch12]. Select Harvest has a challenge to differentiate itself from the other producers in order to have access to customer loyalty. This they can only achieve through creativity in their products and higher product quality[Cam13]. Bargaining Power of Customers With the inclusion of various competitors in this market the buyers are gaining more and more power. This gives the buyers an option to buy other products if they feel that the Select harvest products are not suitable for them. Various issues in Australia have caused the buyers to spend more than before. $100 more is spending more than it is collected in revenue.[Ste15]. In light of the increase in spending we may conclude that these factors have made a change in the purchase of agricultural produce. Bargaining Power of Suppliers The existence of suppliers unions in the industry formed by the suppliers enable them to be able to leverage the firm to pay more and bend to their demands. The existence of these unions enables them to have power to control the company and the way they are treated within the supply sector. Rivalry among existing industry firms The existence of firms producing substitute goods creates rivalry within the firms hence the competition in the price level at the retail markets and the forces that attract consumers to their products. The presence of different substitute performance ranging from quantity and quality creates choice and preference within the consumers hence the company’s competition to gain loyalty from these consumers. The engagement of the Select Harvest limited in the export market however, increases the companies chance to compete in the market allowing them to be able to achieve greater success. Overall Industry Attractiveness Porters five forces industry analysis is that Select Harvest limited might have difficulties in the years to come dues to high substitute’s products together with the strong bargaining power from the company’s customers. Though there are quite noticeable entry barriers to the entry into the foods and nuts market, online shop will achieve a competition to the food market. The company might father need to go along with the customers’ demands to be able to achieve success with its competitors. Never the less the availability of substitutes and the presence of choice gives the firm an edge in the competition. Retail Industry Drivers Factors that have influenced the retail industry in Australia Include: Availability of Brands. The company makes profit through the existence of numerous retail products brands that it sells to consumers. The availability of choice is key in the retail market. Through the companies marketing of its products to distributors, industrial users and retailers under the Lucky Soland and Sunsol brand as well as the Alling Farm Brands and the Renshaw brands in the whole sale and industrial Marke[Blo12]. Localization of Products to their Consumers. All regions prefer product that are local to them[Pri11]. Select harvest creates products from raw materials that their customers are familiar with. The Use of Almond raw materials that are Natural and widely used make the company explores an extensive market of their produce. The sales of Nu-vit product s doing well in Hong Kong and Singapore for their preference of natural products[Cha141]. Online Shopping Online shopping in Australia is expected to grow according to the IBIS World. This form of market is expected to sour in the year 2015. It is expected t reach $2,194 million in the year 2015. This is a 14.6 percent increase from the year 2014 that it was $ 1,914.4 million. This increase according to the IBIS is caused by improved use of online website and stores and fast efficient and affordable delivery options. This mode is expected to lead to revenue growth of up to 14.6% for the year[Lan15]. Consumer Confidence According to the Westpac Banking Corporation of the institute of Melbourne[Wes15], Australian Consumer confidence has decreased to 96.20 In the Month of April 2015 from a level of 99.47 in the month of March 2015.In Australia consumer confidence averaged to 101.79 the year 1974 until 2015. This has caused it to reach an all time high of 127.67 in the month of January year 2005 and low of 64.61 in 1990 November. Currency Rate The Australian dollar is strong at present hence presenting a threat to the retailer operating within the country. This creates an increase in the price of the goods sold in the local market forcing the customers to source online to seek for cheaper prices overseas so as to explore the benefit brought about by the strong exchange rates created. To prevent this the domestic retail shops will have to create discounts in the sale of their products in order to prevent the retailers from moving online. This move will be at a disadvantage to the retailers as it will squeeze their profit margin. Government Regulation Currently the Australian Government under the department of agriculture is responsible for the regulation of sale, import and export of food stuff in the country. It administers requirements that food processes must comply with. The first set of this requirements must comply with the safety quarantine issue while the second must comply with food safety regulation set out in the Food control Act of 1992. The food must meet biosafety standards to be allowed either in or outside the country. And they are subject to monitoring by the Australia New Zealand Food Standards Code[Aus15]. Select Harvest products have to pass through a number of compliance’s and regulations to make sure that their products are accepted in the market. This makes it complicated for other products to enter the market without them having achieved the set compliances. Global brand presence The presence of well-known global brands of food products like Wallnuts, MWT Foods, Australian Macadamias, Go Natural and Almondco that have entered the market for the past years have seen a threat to the Select Harvest being by offering substitute products and hence squeezing their sales. The closeness of their geographical location to the retail shops is an advantage for the company. Interest rate The presence of interest rates hugely affects the market. Increase in the interest rates means that the consumers will have less disposable income as they will need to pay more interest for their loans. This also means that businesses which are levered will have to pay more for their debt. This will mean low purchasing power for the household an increased product price on the part of the producers. Reference ODo13: , (O’Donoghue, 2013, p. 12), Cha141: , (Chambers & O'Donoghue, 2014, p. 3), Com13: , (Comind Work, 2013), Wij12: , (Wijaya, et al., 2012, p. 7), XNT11: , (Xntrek, 2011), Sch12: , (Schenck, 2012), Cam13: , (Cameron, 2013), Ste15: , (Stewart, 2015), Blo12: , (Bloomberg Business, 2012), Pri11: , (Price Water House Coopers, 2011), Cha141: , (Chambers & O'Donoghue, 2014), Lan15: , (Langley, 2015), Wes15: , (Westpac Banking Corporation, 2015), Aus15: , (Australian Government Department of Agriculture, 2015), Read More